July 18, 2012

Omaha Landlord Newbie - Part 2

I made the decision to purchase the fixer upper rental home.   (click on link below to read Part 1, dated May 17th), my closing purchase price was $5300.   It is official, "I am an Omaha landlord"   At the time I figured if I worked hard, in about two months, I will be ready for tenants.  Well, two months have come and gone since closing.  I am now completely buried in ongoing repair/renovation work.   I have been working very consistenty nearly every night and weekend on this investment.  I have begun to call it my "retiremrent project".  I have pushed back my rental ready date until October 1st.
My girlfriend is completely mad at me about this whole rental idea. I have not spent enough time keeping up our relationship. I trie to make the point that this is an investment and it is good for our future. Somehow, she does see it that way.  What I call my retirement project, she calls it my "ghetto home project".   Bottom line,  no support at home on this endeavor.

Work, work, work   I look around and wonder if I am making progress. It seems that I completely underestimated the amount of time it would take to get the work completed.  I thought it would take me a couple evenings a week to get it finished.  Instead, count on it being six evenings a week of work.

I had decided that getting the home "weather tight" was going to be the first place to start renovation/repair work.  That means fixing the basketball size hole in the roof.   Upon closer inspections, the sub-roofing had severe water damage in a much larger area.  The chimney area further up the roof was leaking and water has basically rotted the sub roofing all the way down to the roof eave. About 30% of the sheathing had to be removed and replaced.   It was best to remove and replace the shingles on the entire back side of the roof (6 square). It was time consuming work with only evenings and weekends available.  At one point, I was on the roof about 10:00 pm at night trying to desperately staple down plastic in the wind over the exposed attic area as the rain was building up into quite a storm.  It was a low point.    

I finished the roof after about three weeks later with part time work.  The hardest part was getting my chimney flashed correctly to prevent future leaking. I studied the internet and found some good resources.  I am very pleased with my roof repairs. (I could write a complete blog post on chimney step flashing!)  There is more exterior trim work to be done, but I have pushed it off until later. I wanted to get off that hot roof.
Regarding inside work, I have made four decisions so far "against" the advice of other landlord friends' advice.
#1)  Advice: "Keep those kitchen cabinets. They are still usable with some minor coverup work.  Just replace the counter top."   Action:  I decided to remove the base cabinets but kept the upper cabinets. (I'm still thinking about this one.) The base cabinets all had water damage wicking up the sides and bottoms.  They were basically rotting from the bottom up.  I have not installed new ones yet.
#2)Advice: "Keep that 100 amp panel".  It will be enough for the home."  Action:   Met with Electrician and he convinced me that this home's panel is a little too small given all the code required dedicated circuits.  He convinced me to up the panel size to a 200 amp.
#3) Advice: "The home's wood windows need some repair work but are still usable"  Action: I wanted to replace the old single panes with newer more energy efficient windows. Some windows had plexi-glass replaced sections. About half the windows needed serious sash work.  This type of fine carpentry work is time consuming for a part time carpenter like myself.  To date I have removed four windows completely and replaced with vinyl replacement windows.  They look great! I plan to hire someone with a metal break to flash the exterior trim work next.   I will eventually replace all the windows with new vinyl windows.
#4)Advice: "Keep that old tub and toilet. They still work. Just replace the old tub surround with a new one." Action: I have torn the whole bathroom out. The piping was all galvanized piping which rusts over time and closes off inside pipe diameter. I needed to expose the wall cavities to get my piping installed. I decided to take the next step and remove the old lath and plaster and rebuild it back with water resistant drywall "green board". I met with a plumber earlier this week.   He suggested that installing a second bath upstairs would be pretty easy.  I am seriously considering this option. 

At present, I have removed or taken out of service the home's old "knob and tube" electrical wiring.  This is old and I believe not safe and will cause difficulty with future electrical inspections. I have roughed-in new wiring for the lighting and receptables.  This was hot and dirty work to run and fish wire through the wall and between floor cavities. I am at the point of hiring an electrician to install the new electrical panel and to hook up all my electrical home run wires.

Financial status to date:
*Home purchase price:  $5300 (financed by personal loan, high interest of 13%) Monthly Payment-$127.00
*Materials purchased to date: $2,350
*Contractor/Pros hired:  $0
*Personal Hours worked to date: 211 hours.
Note:  Taxes are coming due @ $325.   I have appealed my tax assessment.  I'm not sure yet what will happen.

I am still excited about my retirement rental home project in spite of the lack of support from family. My time is put to good long term use.  Sure, it is hard work but it is work that will return benefits down the road.        Standby for Part 3 in the coming weeks. 

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